NEW YORK — Wells Fargo & Co. reported Tuesday that its income rose 20 percent in the fourth quarter as its lending business improved, deposits grew and its mortgage business steadied.

The San Francisco-based bank's net income for the last three months of 2011 rose to $4.11 billion, or 73 cents per share, compared with $3.41 billion, or 61 cents per share, in the year-ago quarter.

Revenue slipped 4 percent to $20.61 billion from $21.49 billion a year earlier.

Analysts, on average, were expecting profit of 72 cents per share, on total revenue of $20 billion, according to data provided by FactSet. Wells Fargo's stock rose 29 cents, about 1 percent, to $29.90 in premarket trading.

Wells Fargo said its average deposits rose 9 percent to $864.9 billion. That reflected a 3.2 percent jump in consumer checking accounts and a 12 percent rise in checking and savings deposits from last year.

The growth in deposits at Wells Fargo came as the bank's customers set aside more money as a precaution against uncertainty in the economy.

The amount of loans on Wells Fargo's books edged up 2 percent to $768.6 billion as both commercial and consumer lending grew. Wells Fargo is the largest consumer lender in the U.S.

The bank also benefited as more of its customers paid their bills on time. Wells Fargo wrote off $2.6 billion in loans as uncollectible, including $2.17 billion in consumer loans, down from $3.84 billion last year. Loans considered past due and likely to default declined, ending the quarter at $25.6 billion, compared with $32.4 billion last year.

The improvement in Wells Fargo's loan portfolio allowed the bank to release $600 million from its reserves to cover uncollected loans. That money flowed directly to the bank's bottom line.